Nationwide’s Casey Kempton has a vision to bring positive vibes back to engagements between personal lines insurers and their customers—and it starts with understanding the “mental models” that homeowners and drivers reference to understand insurance.
Kempton, who has been president of Nationwide Personal Lines for just about a year, has a research background in cognitive anthropology—in her words, “the understanding of culture as it exists in the minds.”
For the last two decades, she has been observing the insurance customer culture—and the mental models they rely on—like “switch and save.” Those shortcuts to understanding personal lines insurance are ripe for change, she believes.
“I think the industry, in general, has an opportunity to bring the value of the protection that we provide on multiple dimensions [into] a much more positive light than the way that we, collectively, have engaged customers previously,” she told Carrier Management recently.
Kempton was responding to a question about why she chose to accept a position in personal lines, after most recently leading commercial lines digital business initiatives at Chubb, at a time when both auto and homeowners insurers were dealing with their biggest challenges in decades. In short, there’s a lot of opportunity to put an understanding of mental models to work in personal lines, she suggested.
“I’m not suggesting that customers see it negatively, but you do hear sometimes, ‘I’m not sure if the insurance company is nickel and diming me’—just in general, not any company. Or ‘I’m not sure at the moment of claim that I really have confidence in what’s going to happen because I don’t 100 percent understand what I’m covered [for].’”
“Our product [is] a legal contract,” which independent agents and captive agents need to translate for customers. It’s not something customers have to think about every day. “So, at a moment of loss, there’s a little bit of panic that comes,” she said, giving just one example of where she sees opportunity for carriers like Nationwide “to really just lean into the market.”
In particular, Kempton used the phrase “lean in” to refer to ways in which personal lines insurers can connect with consumers to build “trust, confidence and control” in their interactions.
How We Got Here
Before sharing some specific ideas, Kempton offered a view of recent history.
The advent of the Internet, competitive price shopping and data to enable pricing sophistication resulted in “the 35-year commoditization of the personal lines industry,” which first occurred largely in auto. With that commoditization, “we eroded some of the more local value of how auto insurance connects with consumers,” she said, referring to the industry overall and noting Nationwide’s long-time history of service through local agents.
“The advent of brand-driven direct writers somewhat changed customers’ perception,” resulting in a view of the industry that is focused on the idea that “this is a product from which I can realize discounts, and that is motivating me to switch and seek a better deal.”
“We’re almost in that mindset of devaluing the value of the insurance company in that commoditized way,” she said.
Homeowners insurance is less commoditized—agents offer guidance on the appetite for risk, the need for umbrella policies, etc.—but auto and homeowners ultimately “got roped in together,” she said.
The mental model “creates an expectation of the insurance company [that will] give me the most for as little premium” as possible. “That’s a tenuous equation when the world does change,” she said, referring to recent challenges of weather volatility and inflationary pressures that have prompted insurers across the industry to raise homeowners and auto insurance rates.
In the customers’ minds, “‘They’re raising rates. That’s bad.’ There isn’t an understanding that the total cost to insure everything has risen at a rate and perils have changed.”
Experiences Matter
Kempton believes insurers can begin the process of trust-building by helping customers appreciate the fundamentals of protection in non-catastrophe, non-weather potential loss situations. That involves bringing them solutions that engage them in mitigating damage from “core exposures,” rather than educating them about the cost burdens of insurers.
As a consumer, “you can see your property insurance as somewhat of a home maintenance policy—’I can let things slide, and it’s OK because the insurance company will pay for it if I have a loss.’ Or you can recognize, as a homeowner, where your responsibility starts and stops on the fundamental conditions of your home…”
“Then your base premium relative to projected losses is lower. You have the insurance and it’s affordable for the big [catastrophic] losses,” she said, proposing this shift in mental model as a step toward creating a better understanding of the value of insurance.
Go to Carrier Management to read the rest of the story.
